Accounting Policies of ICICI Prudential Asset Management Company Ltd. Company

Mar 31, 2025

Note 1 Material accounting policy information

This note provides a list of material accounting policies information adopted in the preparation of
these financial statements. These policies have been consistently applied to all the years presented,
unless otherwise stated.

1. Basis of preparation

1.1 Compliance with Ind AS

The financial statements comply in all material aspects with the Indian Accounting Standards
(Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under
Section 133 of the Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act, as
amended from time to time

1.2 Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the
following:

• certain financial assets and liabilities are measured at fair value;

• defined benefit plans - plan assets are measured at fair value; and

• Share-based payments measured at Fair Value

2. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision maker. Refer note 37 for segment information presented.

The power to assess the financial performance and position of the Company and make
strategic decisions is vested in the chief executive officer & managing director who has been
identified as the chief operating decision maker.

3. Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The financial
statements are presented in Indian rupee (^), which is Company’s functional and presentation
currency. Except as otherwise indicated, all amounts presented in Indian rupee has been
rounded to the nearest million with one decimal.

(b)Transactions and balances

Initial Recognition

Foreign currency transactions are translated into the functional currency using the exchange
rates at the dates of the transactions.

i Monetary items:

Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end
exchange rates are recognised in profit or loss.

ii Non-monetary items:

Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates at the dates of the initial transactions.

Non-monetary items that are measured at fair value in a foreign currency are translated into
functional currency at the exchange rate when fair value is determined.

All foreign exchange gains and losses are presented in the Statement of Profit and Loss.

4. Revenue recognition

Revenue is recognised when (or as) the Company satisfies a performance obligation by
transferring a promised good or service to a customer based on the 5 step approach as set out
in Ind AS 115 (detailed below).

When (or as) a performance obligation is satisfied, the Company recognizes as revenue the
amount of the transaction price (excluding estimates of variable consideration) that is
allocated to that performance obligation.

The Company applies the five-step approach for recognition of revenue:

• Identification of contract(s) with customers;

• Identification of the separate performance obligations in the contract;

• Determination of transaction price;

• Allocation of transaction price to the separate performance obligations; and

• Recognition of revenue when (or as) each performance obligation is satisfied.

Management fees

Management fees (net of GST) from mutual fund schemes are recognised on an accrual basis
in accordance with the investment management agreement and provision of SEBI (Mutual
Fund) Regulations, 1996. The Company receives investment management fees from the mutual
fund which is charged as a percent of the Assets Under Management (AUM). Revenue from
management fees is recognised as and when services are performed over time as the customer
simultaneously receives and consumes the benefits provided by the Company.

Alternative Investment Fund(s)(‘AIF''), Portfolio management services and advisory services

The Company provides alternative investment fund(s), portfolio management services and
advisory services to its clients wherein a separate agreement is entered into with each client.
The Company earns management fees which is generally charged as a percentage of the
Assets Under Management (AUM) and is recognised on accrual basis. The Company, in certain
instances also has a right to charge performance fee to the clients if the portfolio achieves a
particular level of performance as mentioned in the agreement with the client, to the extent
permissible under applicable regulations. Revenue from alternative investment fund(s),
portfolio management fees is recognised as and when services are performed over time as the
customer simultaneously receives and consumes the benefits provided by the Company.

Set up Fees

Set up fees received by the Company for alternative investment fund(s) is amortised over the
life of the fund.

5. Income tax

Current taxes

The income tax expense or credit for the period is the tax payable on the current period’s
taxable income based on the applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period. Management periodically evaluates

positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts

expected to be paid to the tax authorities.

Deferred taxes

Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax
losses only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
deferred tax assets and liabilities and when the deferred tax balances relate to the same
taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity, respectively.

6. Leases

As a lessee

Leases are recognised as a right-of-use asset and a corresponding liability at the lease
commencement date. For leases of real estate for which the company is a lessee, it has elected
not to separate lease and non-lease components and instead accounts for these as a single
lease component.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:

• fixed payments

Lease payments to be made under reasonably certain extension options are also included in
the measurement of the liability. The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined, which is generally the case for
leases in the company, the lessee’s incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security
and conditions.

To determine the incremental borrowing rate, the company:

• where possible, uses recent third-party financing received by the individual lessee as a
starting point, adjusted to reflect changes in financing conditions since third party financing
was received ; and

• makes adjustments specific to the lease, e.g. term, country, currency and security.

Lease payments are allocated between principal and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives
received

• any initial direct costs, and

• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset''s useful life and the
lease term on a straight-line basis. If the company is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases of equipment and all leases of low-value assets
are recognised on a straight-line basis as an expense in profit or loss.

7. Impairment of non financial assets

All non financial assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent
of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial
assets that suffered an impairment are reviewed for possible reversal of the impairment at the
end of each reporting period.

8. Cash and cash equivalents

For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents
include cash in hand, balances and short term deposits with other banks and other short¬
term, highly liquid investments with original maturities of three months or less which are
readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.

9. Trade receivables

Trade receivables are recognised initially at transaction price and subsequently measured at
amortised cost using the effective interest method, less provision for impairment.

10. Investments and other financial assets

i. Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other
comprehensive income, or through profit or loss), and

• those measured at amortised cost.

The classification depends on the entity’s business model for managing the financial
assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or
loss or other comprehensive income. For investments in debt instruments, this will
depend on the business model in which the investment is held. For investments in
equity instruments, this will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair
value through other comprehensive income. MTM on Investments held by the Company
to settle specific liabilities towards employees are classified at fair value through P&L
with a corresponding impact of MTM to the liability account.

The Company reclassifies debt investments when and only when its business model
for managing those assets changes.

ii. Recognition

Purchase and sales of financial assets are recognised on trade date the date on which
the Company commits purchase or sale of financial asset.

Interest income

Interest income from debt instruments is recognised using the effective interest rate
method. The effective interest rate is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to the gross carrying
amount of a financial asset. When calculating the effective interest rate, the company
estimates the expected cash flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension, call and similar options) but
does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is
established, it is probable that the economic benefits associated with the dividend will
flow to the company, and the amount of the dividend can be measured reliably.

iii. Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transaction costs
that are directly attributable to the acquisition of the financial asset. Transaction costs
of financial assets carried at fair value through profit or loss are expensed in profit or
loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business
model for managing the asset and the cash flow characteristics of the asset. There are
three measurement categories into which the Company classifies its debt instruments:

• Amortised cost. Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured at
amortised cost. Any gain or loss arising on derecognition is recognised directly in profit
or loss. Impairement losses are presented as separate line item in the Statement of
Profit and Loss.

• Fair value through other comprehensive income (FVOCi)\ Assets that are held for
collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and inter est, are measured
at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains
and losses which are recognised in profit and loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified
from equity to profit or loss. Interest income from these financial assets is included
using the effective interest rate method. Foreign exchange gains(losses) are presented
in net gain on fair value changes and impairment expenses are presented as separate
line item in statement of Profit and Loss.

• Fair value through profit or loss (FVTPL)Assets that do not meet the criteria for
amortised cost or FVOCI are measured at fair value through profit or loss. A gain or
loss on a debt investment that is subsequently measured at fair value through profit or
loss is recognised in profit or loss and presented net within Net gain/loss on fair value
changes in the period in which it arises.

Equity instruments

The Company measures all equity investments at fair value through profit or loss.
Changes in the fair value of financial assets at fair value through profit or loss are
recognised in Net gain/loss on fair value changes in the Statement of Profit and Loss.

iv. Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses
associated with its assets carried at amortised cost and FVOCI debt instruments. The
impairment methodology applied depends on whether there has been a significant
increase in credit risk. Note 35(b) details how the Company determines whether there
has been a significant increase in credit risk. For trade receivables, the Company
applies the simplified approach required by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be recognised from initial recognition of the
receivables.

v. Derecognition of financial assets

A financial asset is derecognised only when

• The Company has transferred the rights to receive cash flows from the financial
asset;or

• retains the contractual rights to receive the cash flows of the financial asset, but
assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has
transferred substantially all risks and rewards of ownership of the financial asset. In
such cases, the financial asset is derecognised. Where the entity has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial
asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all
risks and rewards of ownership of the financial asset, the financial asset is
derecognised if the Company has not retained control of the financial asset. Where the
Company retains control of the financial asset, the asset is continued to be recognised
to the extent of continuing involvement in the financial asset.

11. Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the
balance sheet where there is a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis, or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and
must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.

12. Financial liabilities

i. Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements
and the definition of a financial liability and an equity instrument.

ii. Initial recognition and measurement:

All financial liabilities are recognised initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs.

iii. Subsequent measurement:

Financial liabilities are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in the
Statement of Profit and Loss over the period of the liabilities using the effective interest
rate method.

iv. Derecognition:

A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the
same lender on substantially different terms or the terms of the existing liability are
substantially modified, such as exchange or modification is treated as the de-recognition
of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of Profit and Loss.

13. Property, plant and equipment

i Recognition and measurement

All items of property, plant and equipment are stated at historical cost less accumulated
depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.

Land and buildings are separable assets and are accounted for separately, even when
they are acquired together. Land has an unlimited useful life and therefore is not
depreciated. Buildings have a limited useful life and therefore are depreciable assets. An
increase in the value of the land on which a building stands does not affect the
determination of the depreciable amount of the building.

ii Depreciation methods, estimated useful lives and residual value

Further, as disclosed in table below, based on technical evaluation done by management’s
expert, the estimated useful life of fixed assets of the Company is different from useful life
prescribed in Schedule II of the Companies Act, 2013. Based on the nature of fixed assets
used by the Company and past experience of its usage, the Company considers that the
useful life for respective assets to be appropriate.

Depreciation is provided on a pro-rata basis on the straight-line method over the
estimated useful lives of the assets, in order to reflect the actual usage of the assets. The
depreciation charge for each period is recognised in the Statement of Profit and Loss,
unless it is included in the carrying amount of any other asset. The useful life, residual
value and the depreciation method are reviewed at least at each financial year end. If the
expectations differ from previous estimates, the changes are accounted for prospectively
as a change in accounting estimate.

Leasehold improvements are amortised over the period of the lease on straight line basis
or useful life of the asset whichever is lower.

All fixed assets individually costing less than Rs.5,000 are fully depreciated in the year of
purchase/acquisition.

Depreciation methods, useful lives and residual values are reviewed periodically, including
at each financial year end. Advances paid towards the acquisition of property, plant and
equipment outstanding at each balance sheet date is classified as capital advances under
other non financial assets and the cost of assets not put to use before such date are
disclosed under ‘Capital work-in-progress’. Subsequent expenditures relating to property,
plant and equipment is capitalized only when it is probable that future economic benefits
associated with these will flow to the company and the cost of the item can be measured
reliably. Repairs and maintenance costs are recognized in net profit in the statement of
profit and loss when incurred. The cost and related accumulated depreciation are eliminated
from the financial statements upon sale or retirement of the asset and the resultant gains
or losses are recognized in the statement of profit and loss. Assets to be disposed off are
reported at the lower of the carrying value or the fair value less cost to sell.

14. Intangible assets
Computer software

Costs associated with maintaining software programmes are recognised as an expense as
incurred.

Development costs that are directly attributable to the design and testing of identifiable and
unique software products controlled by the Company are recognised as intangible assets when
the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use.

• management intends to complete the software and use or sell it.

• there is an ability to use or sell the software.

• it can be demonstrated how the software will generate probable future economic
benefits.

• adequate technical, financial and other resources to complete the development and to
use or sell the software are available, and

• the expenditure attributable to the software during its development can be reliably
measured.

Capitalised development costs are recorded as intangible assets and amortised from the point
at which the asset is available for use.

Intangible assets are stated at acquisition cost, net of accumulated amortization and
accumulated impairment losses, if any. Intangible assets are amortised on a straight line
basis over their estimated useful lives. A rebuttable presumption that the useful life of an
intangible asset will not exceed ten years from the date when the asset is available for
use is considered by the management. The amortisation period and the amortisation
method are reviewed at least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the amortisation period is changed
accordingly.

Gains or losses arising from the retirement or disposal of an intangible asset are
determined as the difference between the net disposal proceeds and the carrying amount
of the asset and recognised as income or expense in the Statement of Profit and Loss.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful life using the straight-line method
over the following periods:

Computer software 1-3 year(s)

15. Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to
the end of financial year which are unpaid. Trade and other payables are presented as financial
liabilities. They are recognised initially at their fair value and subsequently measured at
amortised cost using the effective interest method.